The IRS’s recent court filing says the case "remains in its early stages" but notes the agency and President Trump are engaged in "discussions designed to resolve this matter and to avoid protracted litigation," suggesting potential settlement talks in Trump’s $10 billion lawsuit over leaked tax returns. The suit follows a leak by former IRS contractor Charles Littlejohn, who was later convicted, and comes amid several large, politically charged settlements paid with taxpayer funds. Treasury Department officials have said any payout would ultimately come from taxpayers, prompting critics to call the case unprecedented and ethically fraught.
IRS Signals Possible Settlement Talks With Trump Over $10 Billion Tax-Return Leak Lawsuit
President Donald Trump delivers remarks on Dec. 9, 2025 in Mount Pocono, PA.(Alex Wong / Getty Images)
The Internal Revenue Service, in a recent court filing, signaled that it and President Trump are engaged in discussions "designed to resolve this matter and to avoid protracted litigation," language that many observers read as the opening of settlement talks in the $10 billion lawsuit over leaked tax returns.
Remarkably, the filing also acknowledged that the case "remains in its early stages," leaving open whether those discussions will lead to a negotiated resolution or a courtroom showdown.
Context: A Pattern Of High-Profile Payouts
The potential for a large settlement comes amid a string of controversial, high-dollar payouts in politically charged cases. Last year, the family of Ashli Babbitt — the Jan. 6 participant who was fatally shot during the Capitol attack — received roughly $5 million in taxpayer-funded settlement money. Other recent settlements include $1.25 million paid to Michael Flynn and $1.1 million paid to anti-abortion activist Mark Houck.
What The Lawsuit Says
President Trump filed the civil suit against the IRS in February, seeking $10 billion after a former IRS contractor, Charles Littlejohn, obtained and circulated copies of Trump’s tax returns during the former president’s first term. Littlejohn was arrested, convicted and sentenced for his role in the leak.
In its most recent filing the IRS said the case "remains in its early stages" and that the parties are engaged in "discussions designed to resolve this matter and to avoid protracted litigation."
Officials at the Treasury Department have told senators that any payout resulting from the litigation would ultimately be borne by taxpayers — a point critics quickly flagged when weighing the political and ethical implications.
Reaction And Questions
Critics and commentators have seized on the unusual optics of a president suing his own government for a massive monetary award. Paul Waldman wrote that the lawsuit is "so brazen, so shameless, so stunning … that it will stand out in history even in a presidential term drowning in self-dealing." Others have called the case unprecedented in recent presidential history.
Shortly after the suit was filed, the president told reporters he assumed that "nobody would care" if he received a large payout as a result of the litigation. Whether that assumption proves accurate may become clearer if the IRS and the president reach a negotiated settlement — or if the case proceeds toward trial.
We will continue to follow developments and update this story as more information becomes available.
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